World Business Briefing | Europe: Britain: Agency Calls for Lower Late Fees

Published: April 6, 2006

Britain's consumer watchdog agency told credit card companies to cut penalties for the late payment of bills by about half and signaled that other bank charges -- including those for overdrafts, store cards and mortgages -- also need to be reduced. The Office of Fair Trading said excessive penalties on credit card default payments had led to unlawful charges of more than £300 million ($524 million) a year across the industry, and analysts said banks could lose about £1 billion in gross revenue when the ruling was applied to other charges. The agency cannot impose a cap on fees, but said that it expected credit card issuers to quickly adjust their default fee and that it would take legal action if necessary. ''This is our view of the law and we're saying very clearly that we're prepared to litigate or take other measures if we don't get a resolution at this stage. There's been enough chatting about it,'' the agency's chief executive, John Fingleton, above, said in an interview.